More than half plan to expand their businesses, while many remain worried about inflation, interest rates, supply chains and healthcare costs

Small and mid-sized business owners are cautiously optimistic about the coming year, with 74 percent expecting revenue increases and nearly 60 percent planning to expand their businesses, according to the 2025 Bank of America Business Owner Report, conducted in partnership with the Bank of America Institute. This corresponds with Bank of America Institute data which found small business profitability growth has remained resilient throughout 2025.

Approximately half of business owners surveyed believe that local (53 percent), national (48 percent), and global (45 percent) economies will improve over the next year. Many noted their confidence would improve with: stabilization of tariff policy (53 percent), cooling inflation (52 percent), lower interest rates (52 percent), and stronger supply chains (39 percent).

“Business owners are approaching the coming year with confidence and a clear focus on growth,”  says Sharon Miller, president of Business Banking at Bank of America, the nation’s number one small business lender, according to the FDIC.“Many plan to retain their current staff and hire more, and anticipate that local, national, and global economies will improve.”

Key findings from the report include:

• Navigating a tight labor market – Roughly three in five business owners (61 percent) say they are currently being impacted by labor shortages. Those affected are personally working more hours due to staff shortages (50 percent) and raising wages to attract more competitive talent (40 percent). Because the labor market is tight, only 1 percent of business owners are planning to lay off employees in the next 12 months, with 43 percent planning to hire more.
• Adopting AI – AI has become essential to business owners, with 77 percent having integrated it into their operations in the past five years. Of those, they are using it for marketing (50 percent), content production (38 percent), customer service (37 percent), and inventory management (28 percent). According to Bank of America Institute, small business payments to tech services, including AI, were up nearly 8 percent year-over-year as of October.
• Optimizing supply chains – 75 percent of business owners surveyed say they are currently being impacted by supply chain issues. Of those impacted, 52 percent are raising the prices of goods and services and 32 percent are having difficulty sourcing products and services.
• Managing inflation – Most business owners (88 percent) say they are currently being impacted by inflation, consistent with last year. As a result, they are raising prices of goods and/or services (64 percent) and reevaluating cash flow and spending for the year ahead (39 percent).

Looking further into the future, business owners’ focus on growth and innovation over the next five years signals cautious optimism.

• During the remainder of the decade, their priorities include expanding customer bases (47 percent), expanding products and services (39 percent), and exploring new marketing tactics (35 percent).
• Nearly all business owners (91 percent) plan to adopt more digital tools, including AI, over the next five years to further modernize, increase growth, and improve employee efficiency. These business owners plan to:
  • Accept more forms of digital payments (52 percent).
  • Improve employee workflows to make daily tasks more efficient (47 percent).
  • Implement more digital-first marketing strategies (45 percent).
  • Increase cybersecurity measures (30 percent).
• Business owners are divided when it comes to succession planning, with the majority (70 percent) not focused on an exit strategy in the next five years. While 60 percent have a succession plan in place, 40 percent have yet to prepare for the future of their business.
  • Among those with a succession plan in place, one-third (32 percent) plan to transition their business to a family member, while 38 percent plan to sell the business